From PRINT EDITION MicroCap Review Winter/Spring 2017 Issue

Tuesday, March 07, 2017

Global Water Intelligence, a leading industry market researcher, estimates the annual global water market to be $862 billion. Goldman Sachs calls water “the petroleum for the next century”[1] adding, “investors who know how to play the infrastructure boom will reap huge rewards.” With global water consumption doubling every 20 years, they predict that by 2025 about one third of the global population will not have access to adequate drinking water.

Existing Water Treatment Technologies are Expensive and Often Inadequate

After examining data from more than 36,000 water samples collected nationwide by the U.S. Environmental Protection Agency from 2013 to 2015, Harvard researchers found unsafe levels of toxic chemicals in the drinking water of 33 states[2]. In 2016, a USA Today Investigation reported that after analyzing samples from 2012 through 2015, unsafe drinking water was found with excessive lead levels in All 50 States[3].

While some of the violations involve pathogens such as Legionella, most violations appear to involve recalcitrant contaminants such as lead and mercury that are difficult to remove with existing water treatment technologies. The EPA lists[4] over 80 potentially harmful contaminants found in their “Table of Regulated Drinking Water Contaminants”, most of which are difficult for existing water treatment plants to remove. Some of the better-known contaminants are: lead, arsenic, mercury, nitrate, benzene, and pharmaceutical residues.

For the most part, modern water treatment plants perform reasonably well for disinfection, albeit with high capital and operational costs. However, based on the numerous water safety violations, water treatment plants can fall short when it comes to removing recalcitrant contaminants.

Technology Gap with Current Water Treatment Technologies

Today, chlorine remains one of the most commonly used water treatment technologies for standard disinfection processes, but is under increasing scrutiny due to environmental concerns regarding its potential byproducts. UV (ultraviolet light) is gaining popularity because it does not leave any toxic residue or byproduct, however, it is costly to purchase and operate, requiring substantial input energy. Ozone is another technology that can be effective, but is very expensive to purchase and operate, and requires high levels of input energy.

Filtration and membrane technologies are also commonly used to filter out unwanted contaminants, but they are fraught with high maintenance costs and biofilm fouling. Some, such as reverse osmosis systems, often require significant energy and can have limited efficiency.

The world needs more effective clean water technologies that are inexpensive to build and inexpensive to operate in order to meet the ever-increasing demand for clean, safe water.

After millions of dollars in R&D and more than 30 government grants (and counting), BioLargo’s research and development team recently showcased the first pre-commercial prototype of its patented AOS water treatment system, billed as the lowest cost and highest impact, scalable clean water technology in the world.

Test results show that the AOS achieves unprecedented rates of disinfection, and eliminates infectious biological pathogens such as Salmonella enterica, Listeria monocytogenes and E. coli. The AOS has been shown to be 100x more effective at eliminating Salmonella than the best-in-class poultry production water disinfectant, chlorine dioxide. The AOS has also been proven effective in the elimination of toxic oil & gas water contaminants such as naphthenic acids and polyaromatic hydrocarbons. Research suggests the AOS also has the potential to remove soluble chemical contaminants such as acids, solvents, sulfurs, pharmaceutical by-products, nitrates, phosphates, mercury, copper, lead, aluminum, and most contaminants identified by the EPA. Lab-scale testing is planned to verify efficient removal of these contaminants. Past results confirm that the AOS can match the best-in-class technologies in performance at destroying soluble organics while using less than 1/20th the energy and operating more than 10X faster than the commonly accepted industry protocol, hydrogen peroxide and ozone.

The AOS is scalable and modular in design. The AOS is also unique in its ability to deliver residual iodine where the customers desire, or it can remove residual iodine as needed. Its flexibility allows it to be built to meet a wide variety of capacity and flow-rate requirements, and the company is already working on what it calls “Gen 2” for ultra-high flow rates. The AOS Beta, which will feature full data-logging and automation features, is planned for early 2017.

BioLargo recently announced a new relationship with CB&I to support implementation of BioLargo’s advanced water and air technologies and provide independent performance verification. News of the CB&I relationship sends a signal to the investment world and to big industry that BioLargo’s advanced water treatment technology has an important contribution to help make clean water affordable in a wide variety of industries. The relationship also sets the stage to pursue business opportunities in which BioLargo’s technologies or products will be used to serve clients of CB&I and BioLargo.

With 40,000 employees and a 2016 backlog of $20 Billion, CB&I is a world-leading engineering, procurement, fabrication, and construction company, and a provider of environmental and infrastructure services. CB&I builds oil refineries, liquefied natural gas terminals, wastewater treatment plants, offshore platforms, and power plants. CB&I is the world’s largest storage tank construction company, with tanks constructed for the oil & gas, mining, municipal water, and wastewater industries. They are also actively involved in the remediation and management of hazardous waste.

According to BioLargo CEO Dennis Calvert, “all of BioLargo’s technologies can serve a wide array of industrial customers.” He adds, “Our mission to ‘make life better’ includes helping industry tackle operational cost challenges effectively. That intersection of service is likely where our new relationship with CB&I will shine the brightest and we look forward to working with the exceptional team at CB&I to serve industry.”

BioLargo Products for Clean Air and Advanced Wound Care Also Finding Commercial Path­

Since the first sale in May of 2016, BioLargo has focused on marketing its CupriDyne Clean™ industrial odor control products for the large waste-handling markets. Management reports, “We have a number of trials underway with leading companies in the waste-handling industry, and the feedback from customers confirms our belief that they want and need a reliable and affordable solution to their inherent odor management issues.” CupriDyne Clean eliminates powerful odor-causing compounds like H2S and ammonia instantly on contact, thereby maintaining clean, safe, and healthy air. The product is safe and non-toxic for humans, animals, and plants. As the word gets out, and after clearing the usual lengthy hurdles involved with becoming a vendor for large corporate and government accounts, management believes that sales will grow with national supplier contracts.

In January of 2016, BioLargo announced that its Clyra Medical subsidiary closed a $5.75 million financing package for its Advanced Wound Care products. Cash of $750,000 was earmarked for Clyra to complete its product development work, testing, labeling and ultimately its FDA application and approval which, due to the successful development work over the past year, is now scheduled 2017. An additional $5 million line of credit was committed by the investor to support commercialization once FDA approval is complete. Clyra is targeting late 2017 early 2018 to be ready for market.

Looking Ahead

The opportunities for BioLargo to make a meaningful contribution for a healthy world are massive. The company has invested years developing, refining and validating innovative products to “make life better”. As the Company continues to recruit highly qualified people, engage strategic relationships, and properly capitalize various business opportunities, management believes its technology and products will continue to find a successful path forward to significant commercial success as well as an important contribution to helping people and the planet.